Bulls are backing oil price breakthrough

After a period of relative stability in oil prices, a slew of market participants are growing increasingly upbeat on a turnaround for the commodity, predicting a sustained rally in the near term.

The price of oil collapsed from near $120 a barrel in June last year to a low of around $45 a barrel in January. It has since bounced back to around the $60-a-barrel level. Analysts are now contemplating what the new equilibrium should be for the commodity, with a slew of market watchers predicting it could climb to around $70 before the end of the year.

“What we are seeing now is improvement, suggesting a recovery within the longer term downtrend…I’m short-term bullish on Brent,” Roelof van den Akker, a chartist at ING Wholesale Banking, told CNBC Friday. He expects the price of Brent crude to reach $72.40 a barrel in the near future.

“I would not be surprised by further upside potential in Brent oil towards $78 to $80,” he added.

After a period of relative stability in oil prices, a slew of market participants are growing increasingly upbeat on a turnaround for the commodity, predicting a sustained rally in the near term.

The price of oil collapsed from near $120 a barrel in June last year to a low of around $45 a barrel in January. It has since bounced back to around the $60-a-barrel level. Analysts are now contemplating what the new equilibrium should be for the commodity, with a slew of market watchers predicting it could climb to around $70 before the end of the year.

“What we are seeing now is improvement, suggesting a recovery within the longer term downtrend…I’m short-term bullish on Brent,” Roelof van den Akker, a chartist at ING Wholesale Banking, told CNBC Friday. He expects the price of Brent crude to reach $72.40 a barrel in the near future.

“I would not be surprised by further upside potential in Brent oil towards $78 to $80,” he added.

And van den Akker is not alone. Michael Wittner, global head of oil research at Societe Generale, upgraded his own price targets for oil Friday morning, following sizeable gains in the previous session.

On Thursday, both Brent and WTI rallied to new 2015 highs on the back of tensions in the Middle East, a pickup in global demand and the expectation that the U.S. will continue to curb production.

On Friday morning, Brent crude for June delivery was up 70 cents at $65.55 a barrel by 10:00 a.m. London time. U.S. crude for June delivery was flat for the session at $57.75 a barrel.

Wittner now sees the “average” price of Brent being $58 a barrel in the second quarter of 2015, $60 in the third quarter and $65 in the fourth quarter.

“U.S. crude production has reached a plateau and is expected to decline soon in May,” he said in the note.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Based in London, England, Craig Erlam joined OANDA in 2015 as a Market Analyst. With more than five years' experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic commentary. He has been published by The Financial Times, Reuters, the Wall Street Journal and The Telegraph, and he also appears regularly as a guest commentator on networks including Sky News, Bloomberg, CNBC and BBC. Craig holds a full membership to the Society of Technical Analysts and he is recognized as a Certified Financial Technician by the International Federation of Technical Analysts.

MarketPulse is a forex, commodities, and global indices analysis news site providing timely and accurate information on major economic trends, technical analysis, and worldwide events that impact different asset classes and investors.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities.

Opinions are the authors — not necessarily OANDA’s, its officers or directors. OANDA’s Terms of Use and Privacy Policy apply. Leveraged trading is high risk and not suitable for all. Losses can exceed investments.

OANDA (Canada) Corporation ULC accounts are available to anyone with a Canadian bank account. OANDA (Canada) Corporation ULC is regulated by the Investment Industry Regulatory Organization of Canada (IIROC), which includes IIROC's online advisor check database (IIROC AdvisorReport), and customer accounts are protected by the Canadian Investor Protection Fund within specified limits. A brochure describing the nature and limits of coverage is available upon request or at www.cipf.ca.

OANDA Europe Limited is a company registered in England number 7110087 limited by shares with its registered office at Tower 42, Floor 9a, 25 Old Broad St, London EC2N 1HQ and is authorised and regulated by the Financial Conduct Authority, No: 542574.

OANDA Asia Pacific Pte Ltd (Co. Reg. No 200704926K) holds a Capital Markets Services Licence issued by the Monetary Authority of Singapore and is also licenced by the International Enterprise Singapore.

OANDA Australia Pty Ltd is regulated by the Australian Securities and Investments Commission ASIC (ABN 26 152 088 349, AFSL No. 412981) and provides and is the issuer of the products and/or services on this website. It's important for you to consider the current Financial Service Guide (FSG), Product Disclosure Statement ('PDS'), Account Terms and any other relevant OANDA documents before making any financial investment decisions. These documents can be found here.